Equities market wobble over 2019 election uncertainties

As the country heads towards the general elections bid to hold between February 15 and March 2019, heightened political risk continues to take its toll on the Nigerian equities market, causing its major index to remain negative by -2.53per cent this year after last year’s woeful performance

The tension in the country’s political environment and higher interest rates in developed economies have compelled foreign investors to move in droves with their huge investments out the Nigerian Stock Exchange.

More worrisome is President Mohammadu Buhari alleged unconstitutional suspension of the Chief Justice of Nigeria, Justice Walter Onnoghen over failure to declare his assets, after charging him to the Code of Conduct Tribunal, which did not go down well with opposition parties and some section of the judiciary.

Johnson Chukwu, Managing Director, Cowry Assets management Company told Business Hallmark that the equity market would continue to struggle due to political risks until after the general elections when it would rebound.

“The greatest factor that is impeding market recovery is the elevated political risk of the country. Investors’ apathy has been largely due to the heightened political risk,” he further explained.

The All-Share Index and Market Capitalization was down -2.51 per cent to close last week at

30,636.36 and N11.424 trillion respectively, on the back of the consumer goods sector which shed -6.96 per cent and the oil and gas sector dipping -7.66 per cent.

This was despite the leap by + 0.26 per cent after declining for four consecutive trading days.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) explained during its first meeting held January 21-22, 2019 that the decline in the country’s equity market largely reflected the impact of the progressive monetary policy normalization in some advanced economies and the sustained profit taking activities of foreign investors arising from perceived political risk in the build-up to the 2019 general elections.

“The MPC, however, remained optimistic of the gradual reversal of the current trend in the medium term, given the current stability in the foreign exchange market and the external reserves position, as well as continued improvements in key macroeconomic indicators,” it stated in the communiqué issued at the end of the two days meeting.

The bourse which posted 42.3 per cent return in 2017, shed -15.74 per cent at the end of 2018 financial year, hampered by foreign fear triggered by political tension in the country and hike in interest rate in developed economies, especially the United States and England, which affected emerging economies.

Consequently, total foreign transactions in the exchange shrank 28.78 per cent to N60.08 billion in December 2018 from N84.36 billion in the previous month, driven by a reduction in foreign inflows which reduced by 34.31 per cent from N34.97 billion